CEO Today Africa Awards

SOUTH AFRICA 73 www.ceotodaymagazine.com CEO Today Africa Awards 2018 Once the North adit is operational the number of production anthracite sections will increase from 2 to 4. MARKETING Buffalo coal has its own siding in Dundee at Coalfields called Talana and has a loading capacity of over 100 000tpm. The siding is about 250km from Richards Bay Terminal which makes rail costs very competitive. The company has a well-balanced marketing strategy and sells anthracite to the export and inland market. As a junior coal company Buffalo does not have a large balance sheet and it sells it’s coal on a FOR (Free-on-rail) basis in Rand terms to de-risk itself from logistic (rail and port) and exchange rate. The company also has a calcine plant at Coalfields from where it sells its calcine product into the very lucrative manganese smelter market. Due to a shortage of anthracite in the world and local market, the price forecast for anthracite looks very positive. The global seaborne market for anthracite has been in decline since 2007 as the major Asian producers, China and Vietnam, cut exports by about 70% in favour of domestic use. Within South Africa, very few large high-quality metallurgical quality anthracite deposits are left and no significant new projects are coming on line soon. COMMUNITIES With two large local towns, Dundee and Dannhauser, Karstel spends time in the communities. “I have good relationships with both mayors, and we make sure we support the communities.” The three ugly piglets in the South African economy is unemployment, poverty and inequality. The only way to address it is to become more inclusive and support the local communities with equity participation in the mining operation. One of Rowans strategic initiatives was to lead the Mining Charter III. Buffalo Coal has a BEE shareholder with 30% equity stake in Zinoju. The company has a call option on 18% of the BEE www.buffalocoal.co.za shareholding and the plan is to empower the communities and employee share scheme with a 9% equity stake each. The mine formed “Mine Community Forums” for Dundee and Dannhauser Municipalities. These Forums will elect members to go and sit on the Unbutu Development Trust that will manage the 9% equity stake of the community. MANAGEMENT STYLE Rowan’s management style has always been to foster a culture of innovation, to give people a bit of freedom, think a little wider, and then learn smart risk taking. Then he will try to remove the obstacles where he can, so they can achieve their goals. Ultimately, he believes in to empowering his teams, and people should learn out of their mistakes. The people I ask to come and help Buffalo Coal often say they like to work in the environment I have created. For himself he like to be visible and lead from the front. Taken together, it’s all part of creating a step culture change in the company Rowan is very positive about South Africa and says we are definitely one of the top Third World countries, and has a solid economy with good infrastructure, good banks and a sound legal system. The uncertainties with the Mining Charter III have now been addressed and the only issue to be clarified is the “expropriation without compensation” before investors will have a re-look at South Africa. CHALLENGES Buffalo Coal built up a lot of debt in the years when coal prices were low. The company is busy repaying the Investec debt and the number reduced from R200 million to R120 million the last 8 months. Funding of the North Adit projects at Aviemore mine is critical to extend the life of mine from 2 to 15 years. The plan is to look at funding from the IDC once the Investec debt is substantially reduced. Thirdly, complying to Mining Charter III is important and the community and employee share scheme needs to be executed in 2019.